Scraping the Barrel… 3 August 2012

Today’s barrel scrapings include: how it’s okay to be a successful private investor in China as long as you’re not too successful, that some Canadians are looking enviously towards Norway for lessons on how to deal with their petroleum wealth, and a blast from the past via a 1956 American Petroleum Institute propaganda cartoon . See below for more…

Are you sitting comfortably? Then we shall begin… Once upon a time (1993), in a town called Jingbian in northern Shaanxi province, an army unit struck oil. Two years later, the state allowed private speculators to lease drilling rights, and it became a haven for private investors and entrepreneurs wanting to try their luck, and some were extremely successful. By 2003, wildcatters rigs were pumping 2-3% of the country’s entire output- and the central government was getting none of the profits, which were split between local governments and the wildcatters themselves. Despite maintaining the official commitment to respecting private property rights, the central government moved to nationalise the wells, using force and detention to silence the protests of private investors who saw their paths to becoming millionaires disappear in a matter of days.

The government has defended this by arguing that now, the oil wealth is being shared between everyone in the country, not just a few lucky individuals. I’m not sure they would agree..

This Canadian media outlet has just started a series comparing Canada to Norway, and in this one, the way in which both countries have used their oil wealth is compared. The similarities between the two countries are obvious- northern European heritage, oil-rich, strong democracies – but the differences are startling. A major caveat to bear in mind, however, is that Canada has seven times the population of Norway.

The Norwegian government has hugely prioritised national participation in their oil industry, with local content and high taxes a given in their relationships with foreign companies. In contrast, Canada doesn’t have a state-owned oil company, and suffers from regional disputes, especially regarding the oil sands. Despite cultural and historical differences, are there lessons that could be taken from Norway and applied to Canada, or vice-versa? The author of this article seems to think so.

This propaganda cartoon, produced in 1956 by the American Petroleum Institute, is a combination of American pride at their burgeoning oil industry with more than a hint of anti-communist sentiment. Scroll down on the link above to see the entire video, or see the summary below.

Synopsis: during an expedition by martian Captain Cosmic to Earth to find out how other planets get their energy, he has the incredible luck to land in the USA, where he comes across “earth-mobiles which are smooth and efficient, but powerful as well!” Surely such wonderful earth-mobiles must only be available to the highest of Earth officials… but no – they were available to all. Lucky for citizens of planet Ogg, Captain Cosmic manages to find out some key facts about this magical, friction-beating substance called petroleum. The best thing about the USA’s oil industry- that anybody who wants to risk it, can drill for oil! Oil for everyone! And let’s not forget that once oil has been found, the refining process is where the magic really happens; fuel so that planes can defend America’s skies, diesel for great trains to run across the nation, and best of all, gasoline, the world’s most efficient fuel source. Chemical companies competing to make, well, you name it! out of crude oil, have come up with ingenious products- plastics, fabrics, cosmetics… All to make a better life on earth.

The message here is best told from the two books that Captain Cosmic brings back from Earth ; “The story of oil”, which has brought a better standard of life for all living on earth, and “Competition- more for everyone!” which is the key for making oil work for everybody. Aww. It almost leaves the viewer with a warm and fuzzy feeling inside.
To check out previous news roundups, see the Scraping the Barrel series.

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